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The Role of Bitcoin in the Global Banking Crisis

The role of Bitcoin in the banking crisis is praiseworthy as some investors see the flagship cryptocurrency as a safe haven.

Jay Hicks



There are all types of wild speculations and financial advice going around in the global economic sector. The tension between the traditional and decentralized financial sectors has also gained traction.

A recent report published in the media has shed some light on the role of Bitcoin in the ongoing banking crisis. This report suggests that the financial markets were thrown off balance on account of the Fed’s policies to increase interest rates.

However, Federal Reserve is also busy making some changes that will ensure the increase of liquidity in the marketplace.  These monetary policies have made a big impact on the price and traction around Bitcoin.

On one end, investors are worried about the increasing interest rates and on the other hand, the government is also taking measures to contain any sort of financial crisis and offered a banking bailout. Between these changes, Fed is trying to achieve the perfect balance between tightening and easing the economy.

Fed’s Monetary Policy has Troubled Investors

The big players in the market are not happy with the meandering stance of the Fed on the matter of interest hikes. This unprecedented stance on interest hikes and relief has left them without any context and protection.

The resulting pressure on the investors has caused major banking enterprises such as SVB, First Republic Bank, Signature, and Silvergate to apply for government or private financial intervention to keep surviving.

Meanwhile, some other banking enterprises such as Credit Suisse and Deutsche are also undergoing issues to retain their capital valuation. In the same context, governments and Central Banking enterprises around the world are taking measures to ensure any type of liquidity crisis under their jurisdictions.

While the balance sheet of the Fed was incremented by $400 billion within two weeks while the rest of the economy has taken a hit of 64% negation in terms of inflation control.

Chief Economist at Apollo Slams Fed Policies

Torsten Slok is the partner and chief economist at Apollo. He claimed that the spread of interest rates and Fed funds for checking accounts is the root cause of increasing deposit liquidations.

He also noticed that the current divergence is not anything like previous banking crises that stemmed from credit losses. While traditional banking enterprises are losing balance Bitcoin and other commodities such as gold and silver continue to grow.

Another economist, Nouriel Roubini has claimed that most investors wish to get out of the less profitable commercial banking returns and get in line for the 4% short-term yield from treasury bills.

He also claimed that banks can no longer keep depending on the safety pretense to earn massive returns from their fixed deposit accounts. However, he has shown enthusiasm that the government is going to solve the issue eventually.

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